Land surface hydrology models run both in stand-alone or “off-line” mode and coupled with atmospheric models have been used to simulate the water and energy budgets of the pan-Arctic region. Better understanding of these budgets is important because of the predicted high sensitivity of the region to global warming, and because of the dominant role that river runoff plays in the freshwater balance of the Arctic Ocean. One difficulty in evaluating simulated water and energy budgets over the pan-Arctic domain is the paucity of observations of land surface variables over large regions for long time periods. Reanalysis products have the advantage of being consistent and continuous in space and time, and provide the research community with new opportunities to understand the continental water and energy budgets, and to diagnose the performance of land surface parameterizations. In a previous set of off-line simulations, we used the VIC (Variable Infiltration Capacity) land surface hydrology model implemented at 100 km EASE-Grid across the pan-Arctic domain to evaluate the model's representation of various hydrologic processes in the Arctic region. The study suggested that the model was able to reproduce observed streamflow reasonably well, but it is highly sensitive to the precipitation forcings, which are subject to considerable observation error. In this paper we examine the depictions of land surface water and energy fluxes over the Arctic basin based on the VIC model and ERA-40 reanalysis. Specific objectives of present study are: 1) to evaluate the estimates of evaporation from the VIC model over the Arctic with observed P and the P-E derived from the ERA-40 wind and humidity fields ; 2) to know how well the VIC simulations and ERA-40 reanalysis agree with each other; 3) to identify apparent biases in both the VIC model and the ERA-40; 4) to understand how well we can model the latitudinal, seasonal, and interannual variation of the surface energy and hydrological balances of the Arctic land region.